Knut Wicksell 101: A Pioneer of Modern Economics

Knut Wicksell was a Swedish economist who made significant contributions to the fields of marginal economics, monetary theory, and economic policy. His work was influential in the development of both the Keynesian and Austrian schools of thought. If you want to learn more about him, you can check out the subheadings in this article on Zatrun.com.

Who is Knut Wicksell?

Knut Wicksell was born in Stockholm, Sweden, in 1851. He was the son of a successful businessman and real estate broker. Wicksell’s parents died when he was young, leaving him a considerable inheritance. He used this money to finance his education, which he pursued at the University of Uppsala.

Wicksell studied mathematics and physics at Uppsala, but he soon became interested in economics. He was particularly drawn to the work of the marginalist economists, who argued that the value of goods and services is determined by the marginal utility they provide to consumers. Wicksell applied these ideas to his own work, and he developed a number of important insights into the theory of price and distribution.

Marriage and career

In 1887, Wicksell married Anna Bugge, a Norwegian feminist. The couple had two sons. Wicksell taught economics at the University of Uppsala from 1899 to 1901, and then at the University of Lund from 1901 to 1916. In 1916, he retired from teaching and took a position as an economic advisor to the Swedish government.

Wicksell was influenced by a number of different economists, including Léon Walras, Eugen von Böhm-Bawerk, and David Ricardo. He was particularly interested in the work of Walras, who developed a mathematical model of the economy that incorporated the ideas of marginalism. Wicksell used Walras’s model as a starting point for his own work, and he made a number of important contributions to the development of general equilibrium theory.

Monetary theory and economic policy

Wicksell is best known for his work on monetary theory. He argued that the central bank should set the interest rate at a level that is equal to the “natural rate of interest,” which is the rate of interest that would prevail in a free market economy. If the central bank sets the interest rate below the natural rate, it will lead to inflation. If the central bank sets the interest rate above the natural rate, it will lead to deflation.

Wicksell’s ideas about monetary policy were influential in the development of the Keynesian school of thought. Keynes argued that the government should use monetary policy to stabilize the economy. He also argued that the government should use fiscal policy, such as tax cuts and spending increases, to stimulate the economy during recessions.

Knut Wicksell was a highly influential economist who made significant contributions to the fields of marginal economics, monetary theory, and economic policy. His work continues to be studied and debated by economists today.